Correlation Between Hapag-Lloyd Aktiengesellscha and Western Bulk

Can any of the company-specific risk be diversified away by investing in both Hapag-Lloyd Aktiengesellscha and Western Bulk at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hapag-Lloyd Aktiengesellscha and Western Bulk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hapag Lloyd Aktiengesellschaft and Western Bulk Chartering, you can compare the effects of market volatilities on Hapag-Lloyd Aktiengesellscha and Western Bulk and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hapag-Lloyd Aktiengesellscha with a short position of Western Bulk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hapag-Lloyd Aktiengesellscha and Western Bulk.

Diversification Opportunities for Hapag-Lloyd Aktiengesellscha and Western Bulk

-0.26

Correlation Coefficient

Hapag-Lloyd Aktiengesellscha  Western Bulk

Very good diversification

The 3 months correlation between Hapag-Lloyd and Western is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hapag Lloyd Aktiengesellschaft and Western Bulk Chartering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Bulk Chartering and Hapag-Lloyd Aktiengesellscha is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hapag Lloyd Aktiengesellschaft are associated (or correlated) with Western Bulk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Bulk Chartering has no effect on the direction of Hapag-Lloyd Aktiengesellscha i.e., Hapag-Lloyd Aktiengesellscha and Western Bulk go up and down completely randomly.

Pair Corralation between Hapag-Lloyd Aktiengesellscha and Western Bulk

Assuming the 90 days horizon Hapag Lloyd Aktiengesellschaft is expected to generate 0.44 times more return on investment than Western Bulk. However, Hapag Lloyd Aktiengesellschaft is 2.28 times less risky than Western Bulk. It trades about -0.15 of its potential returns per unit of risk. Western Bulk Chartering is currently generating about -0.26 per unit of risk. If you would invest  17,850  in Hapag Lloyd Aktiengesellschaft on September 4, 2024 and sell it today you would lose (1,675) from holding Hapag Lloyd Aktiengesellschaft or give up 9.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Hapag Lloyd Aktiengesellschaft  vs.  Western Bulk Chartering

Hapag-Lloyd Aktiengesellscha

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hapag Lloyd Aktiengesellschaft are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Hapag-Lloyd Aktiengesellscha may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Western Bulk Chartering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Bulk Chartering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Hapag-Lloyd Aktiengesellscha and Western Bulk

The main advantage of trading using opposite Hapag-Lloyd Aktiengesellscha and Western Bulk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hapag-Lloyd Aktiengesellscha position performs unexpectedly, Western Bulk can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Western Bulk will offset losses from the drop in Western Bulk's long position.

The idea behind Hapag Lloyd Aktiengesellschaft and Western Bulk Chartering pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.